The whole model of housing is broken in most countries,including the US. It's interesting that entire economies are willing to subsidise food to make it as available as possible, but the second most important thing in human life-shelter,is completely overlooked. I'm not arguing that everybody should live in large mansions free of charge, however the fact that people who work do struggle to keep roof over their heads either via rent or mortgages is absurd. Also,how society deals with periods of uncertainty,or difficulty. For instance someone takes a mortgage for 30 years period and then ends up having some temporary hiccups on year 5 that can be resolved in a few months ( i.e. unemployment). So instead of saying something like: 'ok, you are having difficult times,which is li ke 1% of the entire period,so you'll simply have to pay this longer', we say: 'tough luck, get out!'.
I'm not sure about the US but I think you are not kicked out from the first day / first month. For auto-leases, the bank might wait a couple months max; but for houses it's usually negotiable with the bank. For the bank, it's a lengthy process that requires selling the house to recover their capital. It's not something they want to go through unless the economy is super strong and they can sell the house really fast.
Right now, it might be hard to 1. sell the house fast and 2. sell the house at a good enough price to recover their capital. If you are only a few months away from a job you should be able to negotiate but my guess is that some (many?) people shouldn't have gotten into these loans in the first place.
Lets say you are $150k into a $200k mortgage, then default. What prevents the bank from selling it at $50k, which is just enough to recover their principle?
Practically? There's a whole bevy of reasons why this isn't done in practice but the bottom line is it's not in the bank's best interest:
- The bank is likely mortgaging other properties in the area. They don't want the value of the housing going down.
- The bank doesn't want to slow down real estate sales with people waiting on "deals" on foreclosures. They'd just as soon be issuing new mortgages which results in more money coming in the door.
- The bank doesn't want to get a bad reputation. Look at the issues Wells Fargo is having. It's easy to lose your reputation, it's hard to get it back.
In general what happens is the property goes to auction. Because the buyer has to either pay cash or secure their own financing and be able to take quick possession of the property the house will typically sell for 17%-20% below market value.
In this example since you're $150K into a $200K mortgage let's say the house's market value is $300K. It would sell at auction for $240K. The bank will have $35K in expenses and fees and so will cut a check for $210K-$50K = $155K to the homeowner.
In general it's in your best interest to sell the house yourself before the bank forecloses. Let's look at this example again. You sell the house for $300K. Say you have $24K in closing costs, plus there's the $50K you owe the bank. You'll net $226K. That's $71K more in your pocket than letting the bank foreclose.
Nothing, in fact the bank might actually make more profits from fees (and they collect the interest in advance). So while you might get away with a few months of delinquencies, it's not a situation you might even want to be in.
The sale process has to be publicized and transparent so that it reflects arm’s length, fair market value. If that’s $50k then the first owner was severely underwater in the first place.
You get lower than market prices but there are some catches: The foreclosure is a long process because they need to wait for the highest bidder, you need to deposit something like 1/3 of the house price, you need to pay some other fees, etc...
I always wondered: is it really cheaper for a bank to repossess a house than it is to pause payments for a few months? Or are they just so skittish that they're not willing to take any chance of non-payment longer than, say, a few months?
Many banks have mortgage forbearance, they recognize that life happens. Unfortunately it's not uniform, some will tack it on at the end, others will require any missed payments to be payed at the end of the forbearance.
Additionally the US does have housing programs[1], so I wouldn't call it "completely" overlooked.
So called social housing wasn't a huge success in other countries either. However the failures aren't because of the housing per se. What a lot of those schemes did, was simply getting a large piece of land and building large, soulless housing estates and filling them with often poor people with a lot of challenges.And then everyone says: OK, this isn't working. But housing is only a part of the equation: the location, access to education,work,and health services. How dangerous and antisocial behaviour isdealt with in such estates.Can people be simply kicked out for poor behaviour instead of semi tolerated for years?
Why is this the only other option? How about removing rent controls and other regulations around building smaller low cost units and then charging a 15% vacancy tax on any unit that is empty for 3 months?
This way we are increasing supply and not encouraging hoarding.
"regulations around building smaller low cost units";
I think this is a fundamental problem for dealing with low cost housing issues. Many cities have building regulations mandating minimum sizes for apartments, and requirements for a minimum number of parking spaces, even for apartment complexes close to public transportation. This makes it impossible for builders to build low cost housing. The problem of low cost housing has been around for a long time; the pandemic is just making it a much bigger problem.
Unfortunately, building an apartment complex takes time, and if the pandemic crisis is resolved (for some definition of resolved) in a year or 18 months, the low cost housing problem will just go back to what it was before the pandemic.
I mean, to some extent, what you're saying is, "Cities require apartments to be better than prison cells, and it's hard to make massive profits making genuinely livable housing that can be provided to people who don't make much money."
Which...yeah, the purpose of low-income housing should be to provide housing that people can still thrive in, no matter their income, not to make massive profits for the real estate or construction companies.
The cities themselves should be footing the bill to make sure their people are well-cared-for. It's already been proven in multiple instances to cost less than dealing with homelessness and its consequences, even if the people they're providing housing for can't pay a single cent (at first).
>The whole model of housing is broken in most countries,including the US.
Broken? Well, as with many things, the problem is that there is a model to start with.
No civilized society in my view should have income or property tax. (for the record there are no civilized societies by that definition). In a country with plenty of land, land zoning/restriction should be the bare minimum.
The collective human enterprise is messed up beyond belief.
This hit me personally (somewhat) yesterday - I'm not being evicted, but learned that my apartment was rented out from me during the COVID-19 crisis (used in past tense) yesterday. Struggling with enough other things that a move certainly wasn't envisioned in my future.
I was already dealing with a ton of uncertainty, but this one now takes the cake.
Unfortunately, I was predicting something like this while volunteering at the homeless shelter. More people are closer to being homeless than they realize. Little did I know it might be me.
Just as a heads up: Assuming this is due to lease being up and the landlord deciding not to allow you to renew, I'm pretty sure the landlord is required to give 30 days notice if you've rented for less than a year, and 60 days notice if you've lived there for more than a year. I'm not a lawyer, but might be worth looking into if they did not follow the proper process.
I should have said rented out from under me - It was rented by someone sight unseen in the middle of COVID without them notifying me I wouldn't be able to renew my lease.
Is this a thing in the US? In most of the world that would be impossible without the landlord giving proper notice that they're not going to let you renew, and a legally permissible reason why.
Further down they say the lease ends in August depending on the state that's probably enough time given they're probably not just finding this out today. I don't think they're forced to have a particular reason for not renewing in the States just a notification period. (not 100% sure I only rented for a few years and never had to really dig in on my local rights)
I absolutely knew the lease ended in August. There was no notification, until yesterday, that my home had already been rented out. I also had the intention to renew said lease, but it's all up in the air at this point.
At this point, fighting may make the difference as to if I am homeless for my 40th birthday. I spent 6 months in a wheelchair in this apartment in the last year. Moving isn't something that I can physically do myself - and family is several states away.
The annual lease ends in August. I'm still struggling with how this all could have happened. They scheduled a showing, and then told me the people looking had already rented the place sight unseen. I've been here for 2.5years BTW.
FWIW I've moved twice during COVID and have had zero issues. In fact apartments are basically draining out of people because they're moving back home or couples are combining rent so the occupancy rates in some of the nicest places in my $bigcity are only at 80% and the concessions are up into the 8 weeks free territory.
I'm moving again in a few weeks and I'm not concerned at all. I also moved to a brand new state on April 1st. That was a really weird few weeks for sure but it's fine now. Masks are everywhere, virtual tours or self-show only.
Obviously not factoring in that you don't WANT to move here just saying that if you're worried about the process it will probably be fine apart from possibly having to decide on a place via a Skype tour.
I would strongly recommend making a post on reddit's r/legaladvice and explaining your situation to them.
Entering your home without your consent is definitely illegal. You might be able to use the threat of suing over that alone as something to get your landlord to renew your lease (e.g. have a lawyer write a letter about them entering your home without your consent, and offering lease renewal as the "settlement"/alternative to going to court over it.)
The ever-increasing income disparity in the US was eventually going to become a breakdown (and a class war). It will happen sooner, thanks to this unexpected global health crisis.
Are they really going to throw the guy who stocks their Walmart shelves out on the street? If they do, who will stock the shelves? Who will work the meat factories?
I have come to believe that the ruling elite must on average be low intelligence, or at least incapable of simple reasoning. Personal greed has displaced nearly every other thought. Unfortunately, the stark realization may not occur for another generation; so those who have done the most damage will likely be dead without ever paying a personal cost.
I'm pretty sure that course was set by Reagan and nobody after him really tried to change it. Obama gave some lip service (with ACA) but his treatment of Occupy Wall Street shows his true colors.
Yes, but the elites can afford the best education to their children, better food. So the children are smarter and after a couple of generations, the gap is huge. That's how meritocracy fails, first the smart and hard-working become wealthy but then they invest in their children more and more.
I don't know the actual numbers, but I believe that the elites' wealth has multiplied much more than it has been inherited. That is to say, inheritance is not the problem - extreme leverage of various kinds is the problem.
It seems humans are bad at long-term thinking, the ongoing environmental collapse is evidence of it. We're quite smart on short time scales but then seem to become yeast-like on longer time scales.
There’s already a lot of civil unrest not from just the BLM protesters but also the people scared to lose their jobs, homes, etc. before that.
We are paying for our lack of social safety net now. There’s enough people already questioning the legitimacy of our liberal democracy.
Having lots of people lose the place they live (effectively making people who have played by the rules and bought into the system) would certainly create a lot of unnecessary instability. Calls for revolution that were actually shared by a big enough population and then gaining steam, calls for civil war, and a fractured political apparatus too impotent to reign it in before it gets out of control.
>We are paying for our lack of social safety net now.
While that might be part of the problem, how much of it is self inflicted? Even people who can afford to save, don't. They blow all their money on a lifestyle. ATM I am trying to gently advise a co-worker to really start thinking about saving for his retirement. 50 years old and it's paycheck to paycheck (6 figure salary)for him.
The same argument could be applied to companies, and they all put out their hands for government money the instant this pandemic happened, and the government gave it to them (mostly, some small businesses did get screwed in that).
The difference between a company and a person, is that when a company has lost everything, it shuts down. But when a person loses everything, they don't just shut down, they take action, and that action could be violent (especially if they're backed up by a mob of people in similar situations).
It doesn't matter that these people didn't save properly, just telling them "Well you shouldn't have gone out to eat twice a week and saved that money, so you'd have three extra months to survive before you're screwed!" isn't going to make them sit and go "Oh yeah, guess I'm the screw up, I'm just going to sit on this street corner now and not bother anyone."
Some of this -- no idea how much without crunching numbers -- is totally self-inflicted. People living well beyond their means, not saving, and then ending up totally up the proverbial creek.
On the other hand, I'm a pragmatist.
You throw 5% of the population out on the streets simultaneously, and you will experience entirely new realms of mob violence. Historically speaking, this is soon followed by a regime which bizarrely invests heavily into researching the full depths of human misery. Not good.
There has to be some sort of balance, a way to address the problem, without creating perverse incentives which harm those the system claims to aid (like our current welfare system). Maybe UBI or UBE. Not sure, but it's a problem we are going to have to solve.
Well partially because that's the culture and status game. That's what you see in movies, on TV, everywhere. Success and personal worth equals money, salary, expensive stuff. Advertisement, marketing, credit cards etc etc. Keeping up with the Joneses, denial about getting old, never sitting down to deeply reflect on their life, being caught in the hamster wheel, the FOMO, etc.
Its the same question as why people eat crappy junk food and get obese. Answer 1 is everyone suddenly became stupid and morally corrupt, answer 2 is that their mind is being bombarded with hyperoptimized perfectly honed marketing strategies, carefully designed by very smart people to drive engagement and profits. One needs to adopt a hostile and skeptical attitude to every outside influence reaching you to be able to resist this. Or just shut off a lot of your media consumption, associate with people who value different things etc. But most people won't be able to do this, because once the average person gets ahead of the curve, the marketing machine is already in front of them.
Tax such incomes at higher rates and invest in the infrastructure that would necessarily support such people anyway were they to become destitute. As a surprising benefit, people who do require welfare of some kind for reasons beyond their control will also be helped. Avoid passing moral judgement on post-tax expenditure - if people live less than ideal lives at that point, that's indeed on them.
It's considered a reasonable perspective in Europe, by and large. I guess one's opinion depends on whether one expects those in control of tax expenditure to provide welfare in an effective way.
Many people don’t have any financial role models in their lives, especially at young ages. It’s not like the school systems teach children about saving, and especially not in the more underfunded districts.
I’m much more inclined to blame maladaptive behaviors on systemic failures to educate people and to provide them opportunity than I am to blame individuals.
Sure, in every system with live agents there will be bad actors and those with poor behavior, but when the system is overrun with examples of this, perhaps it’s the system we should be looking at, not individuals.
I forget what the percentage of Americans is that literally cannot afford to save money, but it's absurdly high.
And then you have massive businesses with massive profits that take all that money and dump it into juicing the stock price, going into debt rather than save a penny for a rainy day...and then, when that rainy (or virus-y) day comes, they come crying to the government for a handout.
Tell me, which of these is more of a "self-inflicted" problem?
Even if true, "people are foolish" is never the source of a problem, and it's not something that can be directly addressed. (Except maybe with education, over the course of generations.) Unless we want social unrest, we need immediate systemic fixes.
6 figure paycheck is in top bucket of population you are by definition cherry-picking an anecdote and applying it to a population which doesn't fit your data.
> There’s already a lot of civil unrest not from just the BLM protesters but also the people scared to lose their jobs, homes, etc. before that.
I just want to point out that the cause of the civil unrest is
A) The history of consequence-free, system-wide racist violence in police departments across the US.
B) The violent response of police departments to the peaceful portion of the protests.
Yes, there have been riots contributing to civil unrest as well — some out of a misplaced justified rage, some from various political groups instigating, and some from people (probably unemployed, considering the unemployment rate) looting stores.
But I would still argue that if police had responded differently to the peaceful portion of the protests the riots would have been smaller. And now we are seeing an effect somewhat like that.
I know it probably wasn’t your intention but I think it’s both inaccurate and an easy trap to fall into to posit BLM protests as a source of unrest — they are fundamentally a _response_.
Lastly, as I know this is a charged topic, I’d like to encourage respondents to do their homework (if one hasn’t already) on the various reputable news sites prior to responding or making counter-claims.
While I’m not citing sources a relatively quick search of most of the reputable, relatively fact-based news organizations out there provides support for what I’m arguing, I think.
[EDIT: You could also list the astoundingly incompetent federal response to the coronavirus as another root cause of current civil unrest, IMHO. Along with, if we are being real, the words of a president who clearly is stoking civil unrest as a re-election strategy. I think that’s a pretty clear statement of fact irrespective of ones political beliefs.]
Yeah, the government should not allow these mass evictions to happen if they plan to stay solvent.
A ton of people who have had homes (in one form of another) suddenly losing them through no fault of their own, especially if they don't have the income to rent anywhere or family to move in with, are not going to just sit and take it, nor should they.
The problem with that is that owners are also short on cash so when the government doesn't allow evictions, they will also need to disallow the inevitable defaults on mortgages.
This will, of course, eventually be paid for by the US government. That money isn't free and will continue our entrenchment in stagflation.
You are right. But for the people in charge, it's probably in their selfish interests to kick the can down the road (like they always did in the past for just about everything else) for future politicians and hopefully a stronger economy to deal with. It's a little baffling they're fighting so hard against it now, especially in an election year.
You can certainly not give any money out to anyone, and watch as society crumbles, the government overthrown, and a new government put in place. Have fun with that. Might be where we are headed anyway, they just delayed it a couple of months with the one time stimulus check.
I think it still might not happen, but that's mainly because Americans have gotten so soft from inertia and just enough kitchen scraps given to the working class over the years that it'll take a lot to get us to that point. But then again we did just have one of the largest demonstrations of civil unrest in the country in about 50 years, so who knows.
Indeed, we may see century bonds soon. It's popular to laden future generations with the current generations debts. Mostly because they can't vote against it since they aren't born yet.
I've made the ironic argument before that Americans suffer from too much stability. Since the economy and currency has been so stable for so long, many haven't bothered to develop good financial habits.
So I sold my rental unit years ago...the landlord business just isn't as much fun as the brochure says it should be. But if I were still in it, and I had reasonable tenants, I would be doing everything I could to avoid evicting them. Who, exactly, are you going to get to replace them in this environment? What's the point of going through that miserable (for everybody involved) process?
For the 'big orgs' they will also want to get in early. You don't want to be the last one evicting people - which is disgusting, but is the face of big business.
They either weren't paying rent before the pandemics (in what case nothing changed) or you can't honestly dismiss that they'll go back to paying after the pandemics.
If the rent is relied upon to pay a mortgage, then it wouldn't be wise to wait until the pandemic is over. Landlords also have bills to pay. Rationally, this pandemic won't ever be over. The Spanish Flu still circulates.
Also, there is no particular reason to believe that jobs will spring back to where they were, if they ever do.
The US homeless population stands at 567K [0] at the time in 2019. And for those that live in urban areas, it feels like the number is twice that already. I've met a few who were already at a marginal state prior to 2009 and the GFC is what pushed them over that precipice. Things haven't gotten a whole lot better for those that have managed to hang on to the lower class. And if you were paying attention the working class either didn't vote or voted for a demagogue to stick it to the do nothing elites.
Evicting millions of people (or foreclosing in the case of houses) is a recipe for disaster for the whole country. If there were tons of employed people waiting on renting a place than from a business standpoint it makes sense. However if you toss people out on the street for non-payment, you still don't get any money, and you make life difficult for all those people. Yet the property itself might be foreclosed on if no rent comes in, and that owner might owe money to some bank and be shut down, but then the bank is holding properties it can't unload. In the end the whole real estate market collapses. There is no easy solution, and we in the US have no political answers either (especially today). But in the end the banks are getting cheap/easy money from the Fed and are less likely to suffer than all the preceding layers. But even that money will eventually cause mass "stagflation" because its not free either.
I have no good idea how the country will look in 3 months.
I understand there are two rounds of forbearance of 6 months each? This may depend on the region.
Agree with your thoughts about evicting, but I'll add that there's an incentive for landlords to keep people in their apartments/houses. A homeless person is much harder to employ. Vacancies will decrease rents. Similarly mass foreclosures will hurt real estate values.
> Bulk foreclosures and massive vacancies will hurt landlords and lenders respectively.
Will they? At least for commercial real estate in large cities where shops are going bust due to high rents, it is often claimed that owners are fine with letting the space stay unoccupied for long periods of time, because they are playing some kind of long game.
The tax system is architected to benefit commercial landlords. The government basically pays you to hold underutilized property, as you can use the losses to offset income in other parts of the business at a premium rate.
On top of that, property taxes are usually based on revenue, so holding property is cheap. I did work for a guy who owned a bunch of vacant lots that paid less taxes than my house. He "rented" the lots to some other affiliated company, who in turn made a bunch of money on parking, etc.
The tiny tear that I would shed for real estate people is smaller then even cable and telephone companies.
Great questions. I, too, watch for the answers here but am not above fanciful predictions.
The trillions will create continued inflation which will push up rent prices and evictions will continue. Certainly there will be an increase in subsidies and any political tactics, it is an election year.
Lower unemployment and continued pay cuts are trends that will stay in place for a while.
I feel like worrying about the "political" response of this is a pretty narrow few. What we've seen in the last few weeks is massive social unrest; so it seems likely that will be extended if they actually start evicting millions of people...
When you rent an appartment or house to someone, your have basically no way to get rid of them. Once every three years you can break the lease ONLY if you make it your primary living place, or your immediate family.
Otherwise your are stuck.
No payments? You are obligated to propose solutions. Evictions take years adheres more years of trying to accommodate the renters.
Vandalism? Nobody cares.
You are on vacation and your house us squatted for more than 48h? You cannot get back without a special permission from the court. It will take some time for your primary house, and infinite time for a secondary one.
Personally, I've seen a lot more 'for sale' signs in my neighborhood recently, though their prices seem to be about what they were before the pandemic. Zillow says that things a good around here and these are normal summer sales, but it feels off to me.
Ancaps should understand that Private Property, like Government, is an institution that requires the threat of violence to enforce. It’s only “defensive force” if you agree to an unlimited right to property, which is the monopoly right to exclude others from using a resource. Step back and think about it.
Some people don’t believe in ownership of ideas (patents)
Some people don’t believe in ownership of authored data (copyright)
Some people don’t believe in ownership of large swaths of land or lakes, resources, including houses etc.
Most people believe in enforcing chattel property.
But as you get further from that, you need an organization and laws to enforce it. At some point the right to property must be balanced against other rights, eg the right of a squatter to have shelter from the elements vs the right of a landlord to enforce rent over 50,000 properties.
There are various positions. Generally most disagree with the concept of intellectual property as it is now.
There are some who would disagree that property as in land can be owned outside of the ability to utilize it. Many point to the first principle of ownership stemming from utilization and improvements upon the land.
Generalizing about ancaps is a difficult proposition. "Herding cats", is an apt description. However your final statement seemed divorced from anything advocated by anarcho-capitalists.
There are real pragmatic concerns about advancing anything outside of the current paradigm. Even within the narrow confines of what is possible with the current system, we see deadlock and endless bickering.
At the end of the day reading political philosophies can be interesting, but not fruitful in the real sense of bringing about change. Just the same, misconstruing the arguments advanced within these philosophies isn't helpful.
